ABB Increases Profit in 4Q 2011

ABB reported an increase in profitability in the fourth quarter of 2011 on a combination of strong revenue growth and cost savings. For 2011, the company reached $40 billion in orders for the first time ever and reported record revenues of $38 billion.

Operational EBITDA, the measure of profitability tracked by management, rose 18 percent from the fourth quarter a year earlier, to $1.6 billion, on a 16-percent increase in revenues (10 percent organic). The operational profit margin on this basis rose to 14.8 percent from 14.4 percent, due in large part to cost reductions of approximately $330 million and better project execution.

Cash from operations in the quarter amounted to approximately $1.7 billion, close to the record $1.8 billion generated in the same quarter of the last two years.

Orders rose 17 percent (10 percent organic), helped by increasing demand for low-loss power transmission systems in both mature and emerging markets. Demand from industrial customers for high-efficiency equipment used to reduce operating costs and increase product quality also grew.

“We continued to execute well in the fourth quarter, especially on our cost savings and project execution, allowing us to report record revenues and solid earnings in a volatile market environment,” said ABB Chief Executive Officer Joe Hogan. “We saw good demand for energy efficiency solutions in industry and for grid expansions and refurbishment, and we expect that to continue.

“At the same time, an unfavorable business mix and ongoing price pressure out of the order backlog will likely weigh on profit margins in the first quarter, but we are more optimistic about the rest of the year and will continue to aggressively pursue growth while retaining our uncompromising approach to cost control.”

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Offshore Nieuws Staff , February 16, 2012;  Image: ABB